He was in boyish good spirits as about 150 contractors buzzed around his mansion and its acres of grounds, building a giant "Mega" sign on the front lawn and erecting a mobile stage that production company MadAnt says is New Zealand's largest. He mugged for the camera and joked, "it's another raid" as a helicopter flew overhead.

The world's most controversial Internet tycoon is preparing to launch his site at 6:48am on Sunday morning—a year to the minute after his New Zealand mansion was raided and his old service was shut down by the authorities. (Press, including Ars Technica, have received an early look at the site.)

Ars freelancer Chris Keall spoke with Dotcom on January 18 at his mansion outside Auckland, discussing topics ranging from Mega's business model to legal threats that may come back to bite his business.

"I would have the same fears"

In its heyday, Megaupload had around 50 million unique users—none of whom have regained access to their files since the site was taken offline. We put the most obvious question to Dotcom first: why should users trust him with their data at all? Wouldn't it be legitimate for users to be spooked by Mega and refuse to go near it?

“You are certainly right," Dotcom conceded. "If I [were] a user of Megaupload, I would probably have the same fears. There will be users who chose not to work with us because of that, and that is unfortunate."

But Dotcom hopes that enough users will value the service he's offering: all-encrypted storage that can't be opened by anyone—even the host. He knows there will be a lot of people coming to check things out in the weeks to come, and first impressions matter.

“There will also be a lot of users who just want to try this new service and see how good it is," he said. "Once they realize there is really no alternative to this service right now in terms of safety and privacy, I think there will be a lot of users who will use this. And over time, you know, when the service is live for a few months and people see these guys are still here, I think the trust will grow.”

The jovial pre-launch atmosphere was only broken when Dotcom and his lawyer Ira Rothken were reminded that this week US prosecutors have raised the possibility of fresh charges if the Mega launch goes ahead—an act that could be interpreted as violating a key bail condition Dotcom signed in by affidavit: not to relaunch Mega or a similar service.

Rothken angrily rejected the notion that Dotcom is violating bail conditions. "Mr. Dotcom is working in consultation with top-notch NZ defense counsel on bail compliance," he said. "[He] is innocent, is presumed innocent, and is entitled to innovate and work in technology like any other innocent New Zealander especially when the US takes away all his assets and delays the extradition proceedings."

Nothing in Dotcom's bail conditions or US law precludes his engaging in lawful business, including Internet and technology businesses, said Rothken.

Embracing even the "smallest, most unreliable" hosts

Enlarge/ Giant Mega sign being prepared for Sunday night's launch event at the Dotcom mansion in New Zealand.

Chris Keall

The Mega business plan will be a distributed model, with hundreds of companies large and small around the world hosting files. A hosting company can be huge or it can own just two or three servers, Dotcom said—just as long as it’s located outside the US.

“Each file will be kept with at least two different hosters, [in] at least two different locations," said Dotcom. "That’s a great added benefit for us because you can work with the smallest, most unreliable [hosting] companies. It doesn’t matter, because they can’t do anything with that data."

More than 1,000 hosts answered a request for expressions of interest on the Mega homepage. Dotcom said several hundred will be active partners within months. Successful hosts will get paid €500 per month per server; each server needs to supply 24 hard drives with 72 terabytes of storage and one gigabit of bandwidth, among other requirements.

That's all down the road, however. For now, Mega is launching with just one, professional, hosting operator—a subsidiary of Cogent, based in Dotcom's home country of Germany.

Dotcom said he needed a rock-solid setup for the launch and an operator who could rapidly scale if traffic and hosting requirements suddenly go through the roof after the January 20 launch (he had hoped to have a server rack operating in New Zealand for the launch as well but said capacity on the Telecom/Singtel/Verizon-owned Southern Cross Cable was prohibitive).

The Washington DC-based, Nasdaq-listed Cogent was one of the suppliers of infrastructure and hosting services to Megaupload before its 2012 takedown. According to the indictment, Megaupload was paying Cogent around $1 million a month to lease “approximately thirty-six computer servers in Washington, DC and France." It was a substantial contract, although one that was dwarfed by that of Virginia-based Carpathia Hosting, where the bulk of Megaupload files were hosted, and are still stranded.

Cogent's fate was closely enough tied to Megaupload that its shares dropped 23 percent in a day after last year's raid, from $19.20 to $15.43. By mid-March, however, the stock had rebounded strongly; it closed recently at $24.11.

Having Cogent back on board is a source of pride for Dotcom; a major public hosting company has made a vote of confidence in his business plan for Mega. He was about to go into further detail on Cogent’s hosting operation in Germany when his lawyer Ira Rothken—in Auckland for the launch and sitting in on the interview—stopped him, citing security concerns if the specific location was revealed.

Launching the most lawyered-up startup in tech history

The Mega business plan has been vetted by more than 20 lawyers across the US and New Zealand, Dotcom said—including those at Rothken's firm and New Zealand law firms Simpson Grierson (one of the largest corporate law firms in NZ) and Lowndes Jordan (an intellectual property specialist). Also on Team Mega are two independent lawyers capable of handling the most difficult work: Queen’s Counsel Paul Davison (often cited as the most expensive lawyer in New Zealand) and Guyon Foley—a criminal lawyer who made his mark prosecuting cases for the police before "switching sides," so to speak.

“This startup is probably the most scrutinized by lawyers in the history of tech startups,” Dotcom told Ars.

Dotcom said it’s inevitable that Hollywood and music labels will “heckle” Mega "going by their past aggression... they can't help themselves" (and there was certainly a foretaste of possible trouble to come this week as Mediaworks, which owns one of the two big radio networks in NZ, pulled ads for Mega from its stations; an insider said the move followed pressure from music and movie advertisers).

Rothken said anybody who comes after Mega has no case.

“You have companies like Dropbox and Google with Drive with materially similar technologies, and they are in business and they’re thriving—and Mega adds encryption,” he said.

But doesn’t encryption add a sinister edge? After all, encryption means Mega will be like the Swiss bank of online storage services; customers could easily use the technology to hide, say, pirated movies or child porn.

Rothken responded that many technologies have dual uses, but on balance provide more public good. That’s how the VCR stayed on the market despite facilitating video piracy. The same argument applies to cloud computing as a whole, he said.

For good measure, Rothken also noted that former Deputy Homeland Security Advisor Richard Falkenrath wrote about encryption as a desirable feature for cloud computing services ("You don’t really need to know where your data is. As long as you know it is safely wrapped in an at-rest encryption cocoon, you should feel secure," the advisor wrote.)

Dotcom added that although other services don't have a one-click encryption option built into their interface, the likes of Google Drive allow you to upload encrypted, password-protected files. Dotcom and Rothken’s arguments are well rehearsed and, on the face of things, have a solid logic.

But Dotcom said the apparent movie and music industry push against the Mega radio ads was an “emotional reaction” from the content industry. Those feelings remain. Even with the best precautions, attempts to shut down Mega—and shut up Dotcom—are unlikely to stop.

Alright. Using some emotionally loaded unfair metaphors in the wrong way because I can't think of any others that would work as well, if the illegal (by any measure) takedown of Megaupload was a Pearl Harbor of sorts, then the launch of /this/ may be... I don't know, the metaphor breaks down here. But I can see this drawing nuclear ire from the *aa's the likes of which we have never dreamed before. I can only hope some of our cherished internet freedoms can survive the insane legal (and non) barrage that's about to rain down. I hope he wins.

as around 150 contractors buzzed around his mansion and its acres of grounds, building a giant "Mega" sign

Quote:

He mugged for the camera and joked "it's another raid" as a helicopter flew overhead.

Quote:

preparing to launch his site at 6:48am on Sunday morning—a year to the minute after his New Zealand mansion was raided and his old service was shut down by the authorities.

Beginning to really love this guy, he must have balls in proportion to his size... and made of pure lead as brass is for sissies!

To spend so much attention to detail must infuriate the US government and it's employers in the RIAA /MPAA (yes, I f**king said it) to such heights that I can hardly imagine, and I have a pretty good imagination

Would certainly not want to get on his bad side, and ALL of here at MAFIAAFire applaud Mr. Kim, stick it to the MAFIAA big boy, and if there is anything we can do for you at MAFIAAFire to help... just ask (we don't charge either, as some people can't understand: it's not about the money).

I was typing my comment above, and at the time there were no comments, by the time I finished writing my comment I was surprised at how many butts seem to have chilli powder in them!

And for those of you asking why Ars / Wired / TechCrunch/ (insert *any* big tech site) is covering this... well, because its one of the biggest things to hit the net (and probably one of the most if not _the_ most controversial) thing to happen to the net in years. We (the readers) want to know _everything_ about it, if you dont; kindly go back to youtube and watch your Justin Beiber videos... because I predict you are not going to like the 200+ comments this article is going to get (that too on a weekend, when Ars usually runs recycled "did you read this this week" articles and has a lower visitor ratio)

I've historically rolled my eyes at Mr. Dotcom (how can you not, even just a little), but I suddenly find myself rooting for Mega. It may be a while before I sign up, but it's no longer out of the question.

In any case, he's doing something interesting, which is more than you can say for that crazy lawyer that keeps showing up in the Ars feed.

Regarding the statement by Falkenrath that "you don't need to know where your data is being stored, as long as it's encrypted you're safe" is partially incorrect. Just because the encryption on your data is uncrackable NOW, that doesn't mean it will be uncrackable in the future. If there's belief that the cost of storage * length of storage < potential value of your data, you'd best believe it's going to be hoovered up and cracked later.

Dotcom says it’s inevitable Hollywood and music labels will “heckle” Mega "going by their past aggression ... they can't help themselves"

Of course they can't. They can't see the forest for the trees. Theirs is a dying business model and they fear any change that takes control away from them. Hence the raid.

Dying business model or not, they have a right to be upset that people are so casually stealing their content on a regular basis. Not that it justifies the way they act over it, just saying that there's lots of bad behavior on all sides here. Basically, the big content companies are kind of like Walter in The Big Lebowski... they're not wrong, they're just assholes.

To the people in the comments trying to do a smear job,strawmen and trying to take the discussion in a different direction rather than whats in the article, you're not fooling anyone (esp since Ars has a higher intellect audience) but its fun to watch you try

Fantastic stuff. The only way to get the old media distrubution companies to change is to drag them, kicking and screaming - and services like Mega that include encryption (which I predict that will soon become the norm) will be much harder to attack with legal/politcial tools, and therefore force massive changes on the industry.

Like it or not, to some commenters here, he does have balls, really. As for the movie and music industry, I completely understand if they are upset that people steal their content. And lets be honest. To anyone here saying that Megaupload and this site will make tmoney by people hosting legal files is as a clown as well. Who has 100 GB of legal files, like the pictures you took, videos or word documents? Yes, some do, but most people use these sites for storing games, software, films, etc.

People don´t lets be idiots. Sites like Taringa.net and other third world countries made their money and income like this, they were creating the content in posts and linking to the files in Megaupload. Both of them where earning huge sums of money on pirated content. This websites where listed in the indictment. And all of them where piracy websites, music, video, games, etc.

Now before you flame me, if Hollywood and the music industry is so concerned, its only their fault for being such idiots in creating a business model. How come Netflix is working and people are gladly paying all over the world 8$ bucks to legally watch films?. Why? Because I would never in my right mind start to spend hours searching for some file in a bit torrent network just to download something with awful quality if I can just hit play and watch what I want when I want and with good quality.

What does Hollywood do instead? Most legal video websites where you can buy films, rent or stream in the US are restricted only to the US. And guess who are the ones that pirate this content? You guess it. The countries outside....

If Hollywood is so idiotic to deliver the content users will pay, then users search their way around. Simple. I don´t say this is correct, but they could kill websites like Mega and piracy online in 1 month if they like by giving them competition. They could setup legal streaming or rent, based on ads, or even for a very small fee like Netflix does. Even if its 20 cents per film is better than nothing. Nobody would go the cheap complicated route if they could do it legally, fast and with great quality. The problem is Hollywood wants 30$ per film, and they prefer 100,000 people paying 30$ per film vs 100 million paying 1$. If they cannot adapt to technology and the Internet then their business model should die and something better will come.

People want the content, so they need to come up with a viable business model. Now software, games, etc, there are other ways, games can be more online with multiplayer incentives, software already work because people want updates, support, and they integrated online services, etc. How come everyone else in the digital realm came up with a business model but the music and video industry never did? Because they are idiots. Simple. If they cannot run a business they need to leave place for smart people. Just like they pirated Edisons technology to setup in the West, Internet is just the payback.

The guy is a serial criminal. He has fled from two countries and is currently resisting extradition from a third. He has bribed politicians, and goodness knows who else.

Giving people like this attention helps them make money.

He offered to fly to the US on his own dime and the DOJ turned him down. He apparently hasn't bribed enough politicians or the right ones, or he wouldn't have had an insane clown posse of a SWAT team descend from the skies onto his house a year ago. And I agree that giving him attention will spread the word and help make him money, so by all means, keep posting.

There might be another reason for hosting in Germany: Data protection laws. I don't know about New Zealand, but data protection laws in Europe, especially in Germany, are much stricter than in the US, giving law enforcement less leverage, when (not if) he gets in trouble again. As the other article stated, he's pricing in euros, which could mean he's using a European payment processor, which could be for similar reasons.

Okay, there's a lot of head in the clouds about this. There's a lot of hypothetical hoity toity talk about it.

The reality is the United States is quickly becoming a country that works on intellectual property. We're ditching production and embracing R&D. It is really important that we stand up for our current IP industry, even if they are spoiled brats, because the up and coming IP industry isn't. It involves engineers and high brained people, the likes of which work on $100,000/license ballistics simulation software.

Dotcom has no purpose for providing this encryption other than avoiding any legal liability as well as any social accountability. We can jump into abstractions to try to justify what he's doing in some sense, but it doesn't change that the premise of this business is being unable to moderate user uploaded content in any way what-so-ever.

The extreme likelihood is that a bill will be introduced into the U.S. congress and passed that requires service operators who operate a service to put in place reasonable (as in expense) measures to be able to moderate their users' activities. If the law's written by someone who's inept, it'll mean mandatory backdoors into secure communications.

All this dude's doing for us is providing the justification U.S. lawmakers need to erode our civil rights further.

So... We should stifle ourselves beforehand in order to stop legislation that stifles us. That's some great logic you got there. Maybe we should also self-stifle political expression before lawmakers enact laws stifling political speech.

Honestly... I have my reservations. This isn't about the ethics, it's about the business itself. Something seems weird about it, how it's being rolled out, but I can't put my finger on it. Maybe that it's locating a good chunk of resource in another US-friendly nation, rather than a pirate haven like, say, Vietnam (a.k.a. the reigning king of file lockers)?

Needless to say, I'm staying away from this one because I sense something fishy. REALLY fishy.

The guy is a serial criminal. He has fled from two countries and is currently resisting extradition from a third. He has bribed politicians, and goodness knows who else.

I don't give a shit what he did in the past, the justice system dealt with him as they felt was appropriate and that's the end of it. I only care about his current/future activities.

Right now he is offering a service where people upload and download arbitrary data. That is not illegal. MegaUpload should not have been shut down, and I hope this new service will not suffer the same fate.

I have to admit that this service sounds interesting. I currently use BoxCryptor to manage my encrypted volumes on DropBox and and Google Drive because it integrates pretty seamlessly with Windows and works great with Android but it would be great to have the encryption built into the storage service.

Dotcom says it’s inevitable Hollywood and music labels will “heckle” Mega "going by their past aggression ... they can't help themselves"

Of course they can't. They can't see the forest for the trees. Theirs is a dying business model and they fear any change that takes control away from them. Hence the raid.

Dying business model or not, they have a right to be upset that people are so casually stealing their content on a regular basis. Not that it justifies the way they act over it, just saying that there's lots of bad behavior on all sides here. Basically, the big content companies are kind of like Walter in The Big Lebowski... they're not wrong, they're just assholes.

Agreed. The content creators need to adjust to the reality of the new world.

A good example from last year: I started watching Smash on NBC. It was on cable on Monday night and was available for streaming on NBC on Tuesday morning. I did not have cable and watched all the episodes on NBC's site. I was so happy that NBC acted sensibly, I bought some of the (overpriced) merchandise from their site.

Another example: I have purchased all of Louis CK shows that are there on his site even though most of his stuff is there for free on youtube.

Sure, there are people out there who pirate just because they can, but the day content creators start acting sensibly, they will find paying customers.

I understand the need to maintain his income and the balls to launch Mega like this complete with google maps prank and raid anniversary, its a sure way to gain supporters among common geeky netizens however I suspect it is going to be a flop. My gut feeling is by now most people got used to dropbox / Google drive / SkyDrive for legal files and crappy slow megaupload wannabes or bittorrent for illegal stuff. And let's face it: The legal vs illegal ratio is undeniably high, I never knew anyone paying up to have "access" and "faster downloads" to legal files that couldn't be had by other means. They all wanted access to warez and movies.

Much as I take dotcom's antics with a pinch of salt, I do admire the sheer "Fuck You" attitude he has. I hope it pans out for him.

In other news, for the first time since registering on this site over a decade ago, I've used the ignore function. Titanium Dragon is, I'm fairly sure, an **aa shill. If not, he's deluded. Either way, I'm sick of his whining, and I have a healthy interest in my copyrighted works not being pinched, and therefore give pro-copyright people a little more leeway than I would otherwise.

Much as I take dotcom's antics with a pinch of salt, I do admire the sheer "Fuck You" attitude he has. I hope it pans out for him.

In other news, for the first time since registering on this site over a decade ago, I've used the ignore function. Titanium Dragon is, I'm fairly sure, an **aa shill. If not, he's deluded. Either way, I'm sick of his whining, and I have a healthy interest in my copyrighted works not being pinched, and therefore give pro-copyright people a little more leeway than I would otherwise.

I've been using the ignore feature more often recently and it quickly improves the threads.

Dying business model or not, they have a right to be upset that people are so casually stealing their content on a regular basis. Not that it justifies the way they act over it, just saying that there's lots of bad behavior on all sides here. Basically, the big content companies are kind of like Walter in The Big Lebowski... they're not wrong, they're just assholes.

Dotcom says it’s inevitable Hollywood and music labels will “heckle” Mega "going by their past aggression ... they can't help themselves"

Of course they can't. They can't see the forest for the trees. Theirs is a dying business model and they fear any change that takes control away from them. Hence the raid.

Dying business model or not, they have a right to be upset that people are so casually stealing their content on a regular basis. Not that it justifies the way they act over it, just saying that there's lots of bad behavior on all sides here. Basically, the big content companies are kind of like Walter in The Big Lebowski... they're not wrong, they're just assholes.

I didn't say they were wrong or don't have a right to be upset over piracy...

But they need to look at the big picture, and that picture is the internet where most anything can be accessed instantly, or near instant, from anywhere in the world.

* There are people that are willing to pay for their entertainment and can't because most of what they want isn't available in their area, or if it's available then the currency exchange rates are a "total fuck me in the ass" (especially USD to British pounds). When you have people willing to hand you money for a service that you provide, you don't say no, or screw them in the process.(* There will always be those that want stuff for free no matter how cheap it is.)

Their ship is sinking and they refuse to climb aboard the life raft that is the net.

Much as I take dotcom's antics with a pinch of salt, I do admire the sheer "Fuck You" attitude he has. I hope it pans out for him.

In other news, for the first time since registering on this site over a decade ago, I've used the ignore function. Titanium Dragon is, I'm fairly sure, an **aa shill. If not, he's deluded. Either way, I'm sick of his whining, and I have a healthy interest in my copyrighted works not being pinched, and therefore give pro-copyright people a little more leeway than I would otherwise.

I'm actually thinking of using the ignore function too. For the FIRST TIME. He's become too obvious and ridiculous.